2022 (4) TMI 1349 - HC - Indian Laws

Dishonor of Cheque - legally enforceable debt or not - presumption of liability against the respondent-accused - Rebuttal of presumption or not - acquittal of the accused - Section 118/139 of the Negotiable Instruments Act, 1881 - HELD THAT - The presumption enshrined under Section 139 of the Negotiable Instruments Act is not absolute and is rather a rebuttable presumption. The accused would be discharged of the presumption, the moment an accused raises reasonable suspicion with respect to the due execution of the cheque. It is not incumbent upon an accused to lead evidence and even subjecting the complainant to cross-examination on such aspects can be taken as sufficient grounds to shift the burden upon the complainant to establish that the debt in question was duly advanced to the drawer of the cheque. Once such suspicion is created by an accused, the burden of proof would thereafter shift upon the complainant to prove that the cheque had been executed in discharge of a pre-existing liability/legally enforceable debt. Existence of legally enforceable debt is a pre-requisite for issuance of a cheque. It is a settled proposition of law that presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from a presumption of fact, such a presumption is a rebuttable presumption and the drawer of the cheque may dispel the same - The aforesaid position in law stands settled in the judgment of the Hon'ble Supreme Court in the matter of HITEN P. DALAL VERSUS BRATINDRANATH BANERJEE 2001 (7) TMI 1172 - SUPREME COURT . The law is thus well settled that in order to rebut the statutory presumption, an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. The Court need not insist in every case that the accused should disprove the nonexistence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible, nor contemplated - To disprove the presumption, an accused should bring on record such facts and circumstances, upon consideration of which, the Court may either believe that the consideration and debt did not exist or that their non-existence was so probable that a prudent man, would under the circumstances of the case, act upon the plea that they did not exist. It is evident from a reading of the discrepancies noticed by the Trial Court and the deficiencies culled out in the preceding, as well as the law settled by the Hon ble Supreme Court in relation to the guidelines while examining an appeal against an order of acquittal that the presumption under Section 139 of the Negotiable Instruments Act is a rebuttable presumption, it is found that there is no illegality, infirmity, perversity or miscarriage of justice in the judgment passed by the Trial Court. It cannot be held that the opinion formed by the Trial Court was incomprehensible or was unsustainable upon the reading and interpretation of the evidence or that the conclusions drawn by the Trial Court from a reading of the said evidence were not tenable. Appeal dismissed.

Summary

Issues Involved:
1. Legally enforceable debt.
2. Presumption under Section 139 of the Negotiable Instruments Act.
3. Financial capacity of the complainant.
4. Appeal against acquittal.

Issue-wise Detailed Analysis:

1. Legally Enforceable Debt:
The appellant-complainant alleged that the respondent-accused issued a cheque for ?10,00,000 in discharge of a friendly loan. The trial court found discrepancies in the appellant's evidence, noting that the alleged loan was not substantiated by any documentary evidence and that the appellant did not produce a key witness to the transaction. The trial court concluded that the appellant failed to establish the existence of a legally enforceable debt.

2. Presumption under Section 139 of the Negotiable Instruments Act:
The appellant argued that the trial court ignored the presumption of liability under Section 139 of the Negotiable Instruments Act. However, the court clarified that this presumption is rebuttable. The respondent-accused denied the allegations and claimed the cheque was given as security, not in discharge of any liability. The court held that the respondent successfully raised reasonable suspicion, shifting the burden back to the appellant to prove the debt's existence, which the appellant failed to do.

3. Financial Capacity of the Complainant:
The trial court found that the appellant did not demonstrate his financial capacity to lend ?10,00,000. The appellant failed to provide convincing evidence of his source of income or capacity to lend such a large amount. The court emphasized that proving financial capacity is crucial in establishing the legitimacy of the alleged loan.

4. Appeal Against Acquittal:
The court reiterated the principles for interfering with an acquittal, emphasizing that the presumption of innocence is strengthened by an acquittal. The appellate court must find substantial and compelling reasons to overturn an acquittal. The court found no such reasons in this case, noting that the trial court's conclusions were based on a reasonable interpretation of the evidence.

Conclusion:
The court upheld the trial court's judgment, finding no illegality, infirmity, or perversity in the acquittal. The appellant failed to establish the existence of a legally enforceable debt and did not demonstrate his financial capacity to lend the alleged amount. The appeal was dismissed, and the trial court's judgment dated 28.11.2014 was upheld.